Federal renewable fuel regulations will require 2 billion litres of renewable fuel
Federal regulations requiring an average renewable fuel content of 5% in gasoline have been finalized and will come into effect starting December 15, 2010. The 5% renewable fuel content requirement in gasoline will require about two billion litres a year of renewable fuel across Canada, a volume estimated to reduce greenhouse gas emissions by about one megatonne a year.
The government expects the regulations to stimulate Canadian demand for renewable fuels and give industry the regulatory certainty it needs in order to secure investments to build new production plants.
"These regulations will help Canada reach our goal of becoming a clean energy leader," said Christian Paradis, Minister of Natural Resources. "Our government supports biofuels and other alternative fuels as part of our commitment to reducing Canada's total greenhouse gas emissions by 17%, from 2005 levels, by 2020."
These regulations are one pillar of the government's broader Renewable Fuels Strategy. Canada will implement a requirement for 2% renewable content in diesel fuel and heating oil, subject to successful demonstration of technical feasibility under the range of Canadian conditions, which would be put in place by an amendment to the Renewable Fuels Regulations.
The federal government's Renewable Fuels Strategy also includes incentives to stimulate domestic capacity. The government has provided $500 million over nine years to Sustainable Development Technology Canada to invest in establishing large scale, first-of-kind demonstration facilities for the production of next-generation renewable fuels. An example is cellulosic ethanol made from non-food sources such as agricultural and forestry residues.
The EcoENERGY for Biofuels supports the regulated demand by facilitating and encouraging domestic production of renewable fuels. The program will provide up to $1.5 billion over nine years as an operating incentive, on a per litre basis. The rates are fixed and start at $0.10/L for renewable alternatives to gasoline and $0.26/L for renewable alternatives to diesel and decline over the life of the program. This makes investment in production facilities more attractive by partially offsetting the risk of price fluctuations for feedstock and fuel. To date, agreements have been signed with 21 companies; the program is currently closed to further applications.
The ecoAgriculture Biofuels Capital (ecoABC) program encourages farmer participation in the biofuels industry. So far, $46 million in capital grants have been committed to eight projects supporting the investments of 500 farmers. The deadline for this program has been extended to allow additional projects to contribute to the volume of biofuels.